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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): June 11, 1996
POLYMEDICA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 1-13690 04-3033368
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
11 STATE STREET
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WOBURN, MASSACHUSETTS 01801
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(Address of principal executive offices, including zip code)
(617) 933-2020
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
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On June 11, 1996, PolyMedica Industries, Inc. ("PMI") distributed all of
the outstanding shares of Common Stock of its majority-owned subsidiary
CardioTech International, Inc. ("CardioTech") held by PMI to its stockholders
(the "Distribution"). CardioTech develops, manufactures and markets its polymer
technologies with particular emphasis on the development of implantable
synthetic grafts for a broad variety of applications, including vascular access
grafts, peripheral grafts and coronary bypass grafts. CardioTech is
headquartered in Massachusetts and operates from manufacturing facilities
located in Massachusetts and the United Kingdom. At the time of the
Distribution, CardioTech had net assets of approximately $3.5 million,
consisting primarily of cash. CardioTech was treated as a discontinued operation
in the PMI financial statements included in PMI's Annual Report on Form 10-K for
the fiscal year ended March 31, 1996.
PMI was entitled to receive additional shares of CardioTech Common Stock as
a result of its rights under a stock subscription agreement with CardioTech,
depending upon the average closing price of the CardioTech Common Stock for the
five trading days after June 11, 1996. Based on the average closing price of
CardioTech Common Stock during such period, CardioTech issued to PMI an
additional 438,726 shares of CardioTech Common Stock. Such 438,726 shares of
CardioTech Common Stock will be distributed pro rata to shareholders of record
of the Company as of June 3, 1996 on or about June 27, 1996.
In order to facilitate CardioTech's transition following the Distribution,
PMI and CardioTech entered into a number of agreements, including a Distribution
Agreement, a License Agreement and a Tax Matters Agreement.
Distribution Agreement. The Distribution Agreement provides for the
principal corporate transactions required to effect the Distribution. The
Distribution Agreement also allocates the costs related to the implementation of
the Distribution between PMI and CardioTech.
License Agreement. PMI has granted to CardioTech an exclusive, perpetual,
world-wide, royalty-free license for CardioTech to use the patent and all other
necessary intellectual property owned exclusively by PMI, and a non-exclusive
perpetual world-wide, royalty-free license of PMI's rights in certain jointly
owned technology for use in the field consisting of the development, manufacture
and sale of implantable medical devices and biodurable polymer materials to
third parties for use in medical applications (the "Implantable Devices and
Materials Field"). PMI, at its own expense, will file patent or other
applications for the protection of all new inventions formulated,
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made or conceived by PMI during the term of the license that relate to the
foregoing technology and all such inventions will be part of the technology
licensed to CardioTech. CardioTech, at its own expense, will file patent or
other applications for the protection of all new inventions formulated, made, or
conceived by CardioTech during the term of the license that relate to the
foregoing technology and all such inventions shall be exclusively licensed to
PMI for use by PMI in fields other than the Implantable Devices and Materials
Field.
Any material breach of the License Agreement by CardioTech will result in
CardioTech being obligated to pay PMI $1,000 per day from the date 90 days after
notice of the breach or default until the date on which CardioTech cures such
material breach or default. CardioTech may seek monetary damages against PMI for
any breach of the license agreement by PMI.
Tax Matters Agreement. The Tax Matters Agreement provides, among other
things, that PMI will be responsible for all federal, state, local and foreign
tax liabilities of CardioTech for periods ending on or prior to June 11, 1996
(the "Distribution Date") and CardioTech will be responsible for all tax
liabilities of CardioTech subsequent to that time. The Tax Matters Agreement
further provides that, for the tax year of PMI that includes the Distribution
Date, PMI will claim on its federal income tax returns certain specified tax
benefits and CardioTech will not claim any of such tax benefits through the
Distribution Date.
The foregoing descriptions are qualified in their entirety by reference to
the full text of the agreements which are incorporated by reference as Exhibits
hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(a) Financial Statements of Business Acquired.
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Not applicable.
(b) Pro Forma Financial Information.
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Not applicable.
(c) Exhibits
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99.1 Plan of Agreement and Distribution between PolyMedica Industries Inc.
("PMI") and CardioTech International, Inc. ("CardioTech") (filed as Exhibit
10.80 to PMI's Annual Report on Form 10-K for the fiscal year ended March
31, 1996 and incorporated herein by reference)
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99.2 Amended and Restated License Agreement between PMI and CardioTech
(filed as Exhibit 10.63 to PMI's Annual Report on Form 10-K for the fiscal
year ended March 31, 1996 and incorporated herein by reference)
99.3 Tax Matters Agreement between PMI and CardioTech (filed as Exhibit
10.52 to PMI's Annual Report on Form 10-K for the fiscal year ended March
31, 1996 and incorporated herein by reference)
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
POLYMEDICA INDUSTRIES, INC.
Date: June 26, 1996 By: /s/ Eric G. Walters
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Eric G. Walters
Chief Financial Officer
and Treasurer
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INDEX TO EXHIBITS
Exhibit
Number Page No.
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99.1 Plan of Agreement and Distribution
between PolyMedica Industries, Inc.
("PMI") and CardioTech International,
Inc. ("CardioTech") (filed as Exhibit
10.80 to PMI's Annual Report on Form 10-K
for the fiscal year ended March 31, 1996
and incorporated herein by reference)
99.2 Amended and Restated License Agreement between PMI and
CardioTech (filed as Exhibit 10.63 to PMI's Annual Report on
Form 10-K for the fiscal year ended March 31, 1996 and
incorporated herein by reference)
99.3 Tax Matters Agreement between PMI and CardioTech (filed as
Exhibit 10.52 to PMI's Annual Report on Form 10-K for the
fiscal year ended March 31, 1996 and incorporated herein by
reference)
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